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(2nd LD) S. Korea posts US$2.29 bln current account surplus in May

Economy 09:29 July 07, 2020

(ATTN: UPDATES with remarks from a BOK official, more details, additional information in paras 8-13, 19-21)
By Byun Duk-kun

SEOUL, July 7 (Yonhap) -- South Korea posted a current account surplus in May, central bank data showed Tuesday, although its surplus more than halved from a year earlier on a sharp decline in exports caused by the new coronavirus pandemic.

The country's current account surplus came to US$2.29 billion in the month, according to preliminary data from the Bank of Korea (BOK).

The reading marks a turnaround from a $3.33 billion deficit posted the previous month, the largest deficit since January 2011.

However, it also marks a sharp drop from a $5.18 billion surplus posted in May 2019.

Current Account Balance Trend

The goods account surplus narrowed to $2.5 billion in May from a $5.5 billion surplus a year before amid a steady decline in exports, apparently caused by the COVID-19 pandemic.

South Korea's exports, on a customs-clearance basis, plunged 23.6 percent on-year to $34.9 billion in May, compared with $45.7 billion for the same month last year, according to the BOK.

Its imports dropped 21 percent to $34.46 billion from $43.62 billion over the cited period.

"The drop in the goods account surplus is largely attributed to a fall in the export volume and prices amid a slump in global trade caused by the global spread of COVID-19," said Moon So-sang, head of the BOK's monetary and financial statistics division.

"Currently, the country's current account balance is largely determined by its goods account balance," she told a press briefing.

The BOK official said it was difficult to predict future conditions when asked if the country may again post a current account surplus for June, only noting "things appear to be positive."

"Considering that exports to China, on customs-clearance basis, increased in June and that its trade surplus widened, things appear to be rather positive," said Moon.

Seoul earlier said the country's exports dipped 10.9 percent on-year in June, marking a fourth consecutive month of drop, but that its trade balance came to a surplus of $3.67 billion, marking a turnaround from a $440 million trade deficit in May that marked the first of its kind in 89 months.

In May, South Korea's service account balance slightly improved, posting a $480 million deficit, narrowing from a deficit of $950 million in May 2019, according to the BOK.

The narrowed service account deficit was largely attributed to improvements in the travel and transport accounts.

This file photo, taken June 1, 2020, shows piers for exports in Busan. According to the Bank of Korea on July 7, South Korea posted a current account surplus of US$2.29 billion in May, marking a turnaround from a $3.33 billion deficit a month earlier. (Yonhap)

The country's travel account deficit sharply narrowed to $160 million from a $750 million deficit a year earlier, and also from a $350 million deficit in April.

The BOK said the number of South Koreans going overseas plunged 98.4 percent on-year to some 38,000 in May.

The number of visitors to the country dropped 97.9 percent to some 31,000 in the month.

The country's primary income account surplus narrowed to $540 million in May from $1.29 billion in May 2019, "in line with a decrease in the income from dividends," the BOK said.

In the first five months of the year, the country's current account balance came to a surplus of $12.29 billion, down from $16.97 billion over the same period last year, according to the BOK.

Its goods account surplus narrowed to $18.13 billion from $30.63 billion over the cited period, while its service account deficit narrowed to $7.15 billion from $9.4 billion.

Its primary income account balance came to a $2.15 billion surplus in the January-May period, marking a turnaround from a $1.37 billion deficit over the same period last year.

bdk@yna.co.kr
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